The provision of loan of up to US$2 million to individual enterprise Agayana the only producer of particleboard in Turkmenistan. The loan will be used to finance supplementary equipment, which will increase the production capacity of the plant and to expand its range of products.
The objectives are: (1) Increase the output and deversify product range. (2) Further strengthen market position. (3) Enable the expansion of exports to Azerbaikan, the Kyrgyz Republic, Tajikistan and Uzbekistan.
ETI score: 80
The DFF SME framework primarily targets the Competitive quality by helping the SMEs to restructure and to become more efficient or professional. Sub-projects can target any of the other transition qualities as the secondary objective. The majority of projects typically support the Well-governed quality by helping companies improve their financial management, or the Green quality by facilitating energy efficiency or environmental improvements.
Individual enterprise Agayana - the only producer of the particleboard and a sole proprietorship registered and operating in Turkmenistan and owned by Mr. Nurmyrat Berdiyev.
EBRD Finance Summary
The EBRD Loan will finance the purchase of various equipment for production of particleboards and working capital requirements.
Total Project Cost
1. Financing structure: the EBRD offers financing that is not available from commercial sources on reasonable terms and conditions, e.g. a longer grace period that is rarely available in the market, FX financing, etc.
2. Risk mitigation: the EBRD provides comfort to clients and investors by mitigating non-financial risks, such as country, regulatory, project, economic cycle, or political risks.
3. Standard-setting: helping projects and clients achieve higher standards: Client seeks/makes use of the EBRD expertise over energy and resource efficiency and climate resilience financing via provision of energy and climate audits, minimum performance standards of technologies, climate related strategies and policies, monitoring, reporting and verification (MRV) systems, etc.
Environmental and Social Summary
Categorised B (2019 ESP). Environmental and Social Due Diligence (ESDD) has been carried out internally and consisted of a review of the completed ESDD questionnaires, follow up questions and a review of photographs related to the existing operations. ESDD demonstrated that the Company is compliant with national laws and has adequate Environmental and Social (E&S) risk management capacity to implement the project in compliance with the EBRD E&S performance requirements (PRs). E&S risks associated with the Company's operations are limited and can be addressed through good practice and standard mitigation measures including those identified in the project Environmental and Social Action Plan (ESAP). The Company will be required to comply with PRs and submitted an annual E&S report to the Bank.
ESDD was based on the reviews of the questionnaires completed by the client and the submission of photographs related to various areas of the production operations. ESDD demonstrated that the Company has arrangements in place to manage E&S issues and are currently further developing their environmental management system. Human resources polices are in line with national labour codes with written information on terms and conditions of employment are provided to all workers. A worker grievance mechanism is in place although this is not formalised. The Company confirmed they do not employee any persons under 18 years of age and the right for employees to organise is available although no workers are members of any trade union and no collective bargaining agreement is currently in place. It was confirmed that the Company has future plans to join the trade union of Turkmenistan.
The Company has an environmental permit in place and checks related to the permit were last made in 2018 by the relevant authorities. The Company confirmed airborne dust created in the production process is managed using dust extraction systems and waste is minimal and only from general domestic activities. Cotton stems used in the production process are confirmed as waste materials and acquired from nearby fields left behind from cotton production. The Company stores approximately 20 tonnes of formaldehyde resin which is used in the production process. This hazardous material is adequately stored and the Company confirmed emergency response plans to deal with any incidents are in place. The Company confirmed they have not consider low or non-hazardous alternatives to formaldehyde.
A dedicated Safety Engineer has been appointed and is the responsible person for Occupational Health and Safety (OHS). It was confirmed the Company are compliant with the labour code and other bye laws that regulate OHS. Training on OHS is provided to all employees on joining the Company and once a quarter thereafter. All employees undergo medical surveillance annually and health certificates are submitted to the client to confirm they are fit for work. The Company confirmed they have measures in place to ensure employees are not exposed to moving parts of the machinery and the installation of the new machinery will be the responsibility of the supplier.
An ESAP has been developed for the project and has been agreed with Company. The ESAP includes further development of the Company's existing Environmental, OHS management systems to align with ISO standards, the further development of the worker grievance mechanism, assessment of supply chains related to raw materials used in the manufacturing process, the implementation of a lock out / tag off system to isolate machinery and an independent fire and life safety audit to be undertaken prior to commissioning of the new line and any remedial actions required to be implemented. The Bank will monitor the project's E&S performance by reviewing annual E&S reports in addition to conducting site visits if deemed necessary.
Technical Cooperation and Grant Financing
(1). Business plan for expansion of production of chipboard: a business plan preparation funded by EU IFCA via the EBRD Advice for Small Businesses (ASB); €8,100 incl. 25 per cent client contribution. (2) Financial due diligence (DD): verification of the Group's financial standing; the EBRD Special Shareholder Fund ("SSF"); €13,190, incl. 30 per cent client contribution. (3) Local legal DD: review the standing and draft agreements from the Turkmen law perspective; SSF; €14,260 incl. 30 per cent client contribution. The Borrower/the Sponsors have also contributed 100 per cent or €12,000 of the cost of engaging a UK counsel.
Company Contact Information
139/1 Gorogly Sh., 744000 Ashgabat, Turkmenistan
PSD last updated
13 Jan 2022
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Environmental and Social Policy (ESP)
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More information on the EBRD’s practices in this regard is set out in the ESP.
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
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